India in 2015

The Indian economy is expected to witness accelerated growth overall, particularly in certain industrial sectors. The country’s growth forecast for 2014 was raised from 5.4% to 5.6% by the International Monetary Fund, primarily at the behest of effective polices expected be brought by the new government. This growth rate is expected to further improve on the back of announcements of foreign direct investment [FDI] liberalization in new sectors such as railways and increasing FDI thresholds in sectors already open to foreign participation. Growth is also expected as a result of measures to curb inflation, which have started showing results, and the government’s promise to streamline and make more robust India’s regulatory regime.

The media and entertainment industry in particular is expected to reach a healthy compound annual growth rate of approximately 14% according to a report by KPMG. There are a number of much awaited measures. Some of them are already in swing, which will bolster sentiment and fuel growth. Other notable changes and measures include: (1) an amendment to the Cinematograph Act which will make camera recordings in cinemas illegal; this will go a long way to help fight piracy in Bollywood; (2) constitution of an intellectual property [IP] think-tank to help draft India’s first policy on IP rights and to advise the Department of Industrial Policy and Promotion on the nuances of IP-related issues that need to be tackled delicately; and (3) a proposed super-regulator for broadcasting, IT and telecom under the Communication Bill that will bring together the various branches of the communications sector and subsume them under one regulatory body. The Communication Bill will repeal four existing acts, including the Indian Telegraph Act, 1885, and the Telecom Regulatory Authority of India Act, 1997.

In addition, the introduction of the goods and services tax regime will see the eradication of multiple layered state and centre level taxes. Although GST is expected to be rolled out effectively from the 2016-17 financial year, this will boost the morale and sentiment not only in the media and entertainment industry, but across sectors.

Digitization of the distribution of the television channels will start playing an instrumental role in the growth of the broadcasting industry from 2015. The first two phases have been completed with more than 60 major cities and towns of India digitized. 2015 will see the real positive impact of these two phases. The third and fourth phases are slated to be completed by the end of 2015 and 2016 respectively. Analogue cable has inherent problems. One of the major problems has been under-reporting of subscribers, which not only leads to a loss of revenue for the broadcaster, but also tax evasion.

The licensing regime for the industry is expected to be simplified and the turnaround time decreased. This will in turn help existing companies and new entrants to streamline their business plans.

The grant of “industry status” to the broadcast industry under the Income Tax Act will help the broadcasting industry to access credits at competitive rates. This will lead to consolidation in the fiscal regime too.

Increased FDI limits in the media and entertainment industry will invite steady investments and encourage new players to participate.

Piracy in its various forms poses a major challenge in the growth of the broadcasting industry and the judiciary has recognized this. Courts in India have delivered certain laudable and landmark judgments to help the industry to fight piracy. One such judgment which is hailed not only in India but internationally in the legal fraternity is the Delhi High Court judgment in the case of Multi Screen Media Private Limited v Sunit Singh and others relating to the digital transmissions of the FIFA 2014 World Cup by numerous pirated websites. The high court banned 218 pirated websites from being accessed in India to protect the integrity of the broadcaster’s IP rights.

Ritesh Khosla, Vice President, Legal, Multi Screen Media, Sony Entertainment Network